Over the last couple of weeks, MNREGA is back in the spotlight. The Union Minister for Rural Development wrote to certain states regarding potential misuse of funds, and it was announced that rural development schemes are open to CAG audit. In large schemes like MNREGA, officials at all levels of government - central, state, district, block, panchayat - have roles to play. This can make it difficult to locate the responsible authority in case implementation issues arise. We list the responsibilities of different government agencies involved in implementation of MNREGA in the Table below.
| Stakeholder | Responsibilities | |
| Gram Sabha | (a) recommending works; (b) conducting social audits on implementation every six months; and (c) functioning as a forum for sharing information. | |
| Gram Panchayat | (a) planning works; (b) receiving applications for registration; (c) verifying applications; (d) registering households; (e) issuing job cards, (f) receiving applications for employment; (g) issuing detailed receipts; (h) allotting employment within 15 days of application; (i) executing works; (j) maintaining records; (k) convening Gram Sabha for social audit; and (l) monitoring implementation at the village level. | |
| Intermediate Panchayat | (a) consolidating Gram Panchayat plans into a Block plan and (b) monitoring and supervision at the block level. | |
| Programme Officer (PO) | (a) ensuring work to applicants within 15 days; (b) scrutinising Gram Panchayat annual development plans; (c) consolidating proposals into a Block plan and submitting to intermediate panchayat; (d) matching employment opportunities with demand for work at the Block level; (e) monitoring and supervising implementation; (f) disposing of complaints; (g) ensuring that Gram Sabha conducts social audits; and (h) payment of unemployment allowance. | |
| District Panchayat | (a) finalizing district plans and labour budget; and (b) monitoring and supervising at district level. | |
| District Programme Coordinator (DPC) | (a) ensuring that the scheme is implemented according to the Act at the district level; (b) information dissemination; (c) training; (d) consolidating block plans into a district plan; (e) ensuring that administrative and technical approval for projects are obtained on time; (f) release and utilisation of funds; (g) ensuring monitoring of works; (h) muster roll verifications; and (i) submitting monthly progress reports. | |
| State Employment Guarantee Council (SEGC) | (a) advising the state government on implementation; (b) evaluate and monitor implementation; (c) determining the "preferred works" to be taken up; (d) recommending the proposal of works to be submitted to the state government; and (e) prepare an annual report to the state legislature. | |
| State Government | (a) wide communication of the scheme; (b) setting up the SEGC; (c) setting up a State Employment Guarantee Fund; (d) ensuring that dedicated personnel are in place for implementation, including Gram Rozgar Sahayak, Programme Officer, and technical staff; (e) ensuring state share of the scheme budget is released on time; (f) delegation of financial and administrative powers to the DPC and Programme Officer if necessary; (g) training; (h) establishing a network of professional agencies for technical support and quality control; (i) regular review, monitoring, and evaluation of processes and outcomes; and (j) ensuring accountability and transparency. | |
| Central Employment Guarantee Council | (a) advising the central government on MNREGA matters; (b) monitoring and evaluating implementation of the Act; and (c) preparing annual reports on implementation and submitting them to Parliament. | |
| Ministry of Rural Development | (a) ensuring resource support to states and the CEGC; (b) regular review, monitoring, and evaluation of processes and outcomes; (c) maintaining and operating the MIS to capture and track data on critical aspects of implementation; (d) assessing the utilization of resources through a set of performance indicators; (e) supporting innovations that help in improving processes towards the achievement of the objectives of the Act; (f) support the use of Information Technology (IT) to increase the efficiency and transparency of the processes as well as improve interface with the public; and (g) ensuring that the implementation of NREGA at all levels is sought to be made transparent and accountable to the public.. | |
| Source: Operational Guidelines, National Rural Employment Guarantee Scheme, Ministry of Rural Development. | ||
Petroleum Secretary S Sundareshan, while addressing a press Conference on Friday, announced the government’s decision to deregulate prices of petrol. Petrol prices shall now be subject to periodic revisions based on fluctuations in market prices. An immediate hike of Rs. 3.50 per litre has already been affected. Prices of diesel shall be deregulated in stages while those of kerosene and LPG shall continue to be regulated by the government. For the moment, diesel has been hiked by Rs. 2 per litre, kerosene by Rs. 3 per litre and LPG by Rs. 35 per cylinder. Crude to retail: Pricing and under-recoveries India imports about 80% of its crude oil requirement. Therefore, the cost of petroleum products in India is linked to international prices. The Indian barrel of crude cost $78 in March 2010. Once crude is refined, it is ready for retail. This retail product, is then taxed by the government (both Centre and State) before it is sold to consumers. Taxes are levied primarily for two reasons: to discourage consumption and as a source of revenue. Taxes in India are in line with several developed nations, with the notable exception of the US (See Note 1) Before the current hike, taxes and duties in Delhi accounted for around 48% of the retail price of petrol and 24% of the retail price of diesel. (Click Here for details) Ideally, the retail prices of petroleum products should then be determined as: Retail prices = Cost of production + taxes + profit margins However, in practice, the government indicates the price at which PSU oil companies sell petroleum products. Since these oil companies cannot control the cost of crude (the primary driver of the cost of production) or the taxes, the net result is an effect on their profit margins. In cases where the cost of production and taxes exceeds the prescribed retail price, the profit margins become negative. These negative profit margins are called ‘under-recoveries’. When international crude prices rose above $130 in 2008, under-recoveries reached an all-time high of Rs. 103,292 crore. Even at much lower prices in 2009-10 (averaging at $70 per barrel), under-recoveries totalled Rs. 46,051 crore. (See Note 2) The latest move is an effort to reduce these under-recoveries. The government cited the recommendations of the Kirit Parkih Committee while announcing its decision (Summary - Kirit Parikh Committee report). Any alternatives to price hike? As is evident from above, under-recoveries can also be reduced by decreasing taxes. In fact, one might argue that by both taxing the product and offering a subsidy, the government is complicating the situation. Usually whenever subsidization coexists with taxation, it serves the purpose of redistribution. For example, taxes might be collected universally but subsidy be granted to the weaker sections only. However, this is not the case in the current situation. What needs to be noted here is that these taxes are a very significant source of revenue. In fact, the total taxes paid by the oil sector to the central and state governments were around 3% of GDP in 2008-09 (See Note 3). Reducing taxes now might make it difficult for successive governments to raise taxation rates on petroleum products again. Moreover, though taxes are levied both by the Centre and the States, the subsidy is borne only by the Centre. Hence, the current arrangement is beneficial to the States. Possible future scenarios The opposition has voiced concerns that the hike in prices is likely to lead to even higher inflation and will further burden the consumer. The Chief Economic Advisor to the Finance Ministry, Dr. Kaushik Basu, however, told the media that these changes would have a beneficial effect on the economy. According to him,
"The (decontrol of petrol prices), coupled with price increase for LPG (cooking gas) and kerosene, will have an immediate positive impact on inflation. I expect an increase of 0.9 percentage points in the monthly Wholesale Price Index (WPI) inflation".
However, he added, that since the hike in fuel prices would push down fiscal and revenue deficit,
"they will exert a downward pressure on prices… More importantly, from now on, if there is a global shortage and the international price of crude rises, this signal will be transmitted to the Indian consumer. It will rationalise the way we spend money, the kinds and amount of energy we use, and the cars we manufacture. It is an important step in making India a more efficient, global player”.
It remains to be seen how the actual situation pans out. Notes 1) Share of tax in retail price (%)
| Country | Petrol | Diesel |
| France | 61% | 46% |
| Germany | 63% | 47% |
| Italy | 59% | 43% |
| Spain | 52% | 38% |
| UK | 64% | 57% |
| Japan | 48% | 34% |
| Canada | 32% | 25% |
| USA | 14% | 16% |
| India (Del) | 48% | 24% |
Source: Petroleum Planning and Analysis Cell, PRS (Data as of Feb, 2010) 2) Under-recoveries by oil companies (Rs Crore)
| Year | Petrol | Diesel | PDS Kerosene | Domestic LPG | Total |
| 2004-05 | 150 | 2,154 | 9,480 | 8,362 | 20,146 |
| 2005-06 | 2,723 | 12,647 | 14,384 | 10,246 | 40,000 |
| 2006-07 | 2,027 | 18,776 | 17,883 | 10,701 | 49,387 |
| 2007-08 | 7,332 | 35,166 | 19,102 | 15,523 | 77,123 |
| 2008-09 | 5,181 | 52,286 | 28,225 | 17,600 | 103,292 |
| 2008-09 | 5,151 | 9,279 | 17,364 | 14,257 | 46,051 |
Source: Petroleum Planning and Analysis Cell, PRS 3) Contribution to Central and State taxes by Oil Sector (2008-09)
| Category | Rs (crore) |
| Sales tax | 63,349 |
| Excise duty | 60,875 |
| Corporate tax | 12,031 |
| Customs duty | 6,299 |
| Others (Centre) | 5,093 |
| Other (State) | 4,937 |
| Profit petroleum | 4,710 |
| Dividend | 4,504 |
| Total | 1,61,798 |
Source: Petroleum Planning and Analysis Cell
